Reaching For The Next SaaS Wave

SAN JOSE, Calif.—It should come as no surprise that Cisco Systems and Adobe Systems, two companies that enjoyed spectacular growth establishing them as tech blue-chips during the nascent Internet, are also among the first companies to embrace the software-as-a-service model (SaaS) as the vehicle of choice for the Internet’s next evolutionary phase.

On Thursday, both companies outlined their vision, their expectations and some of their new offerings for this emerging SaaS platform at the Software and Information Industry Association’s OnDemand conference in San Jose, Calif.

Several hundred attendees, ranging from established tech players to upstarts hoping to carve out a niche in this booming space, came in search of new ideas, potential business partners and maybe even a little validation of their emerging Web 2.0 strategies.

“What’s clear to me as I look out into this room is that I’m looking at the future of the software industry,” Donald Proctor, senior vice president of Cisco’s collaboration software group, said during his keynote address kicking off the conference. “We’re here at a pretty momentous time. We are starting to see some pretty fundamental changes in the world of software.”

Unified communications—the cobbling together of instant messaging, Web conferencing, e-mail, desk phones, mobile phones, blogs and all the other tools employees and businesses use to communicate into one central location or platform—and collaboration—the tools and processes needed for meaningful productivity—have replaced customer relationship management (CRM) as the markets of choice for the SaaS crowd.

That’s partly because those applications lend themselves so well to a browser-based distribution model and partly because they’re precisely the type of applications employees and companies need to manage their data and business processes online.

Cisco CEO John Chambers, during a conference call Wednesday with analysts following the company’s first-quarter earnings report, couldn’t have been more clear when he repeatedly said unified communications and collaboration will not only be the key to Cisco’s growth in the next 10 years but will “drive the next wave of productivity around the world.”

“I cannot overemphasis the importance of leading this transition,” he said.

Cisco, through its $3.2 billion acquisition of WebEx in March, thinks it has a leg up on the competition. It doesn’t hurt that it’s also the dominant provider of network equipment, a platform from which it can extend its tentacles into enterprise and small- and mid-sized businesses (SMBS) alike.

“Collaboration isn’t just something that happens behind the firewall,” Proctor said. “We’re now collaborating with our customers, virtualizing our supply chain and our business partners as if they are part of our company. The days of keeping everything inside and controlling and collaborating only inside the firewall are gone. As time goes on, the next wave of collaboration will be driven not by intranets but by Internets and cross-company collaboration.”

Cisco isn’t the only company that’s caught on this tectonic shift in communications. Microsoft, Google, IBM and just about every other prominent software vendor is rolling out applications and platforms based on the SaaS model that Salesforce.com legitimized for delivery of CRM applications.

Adobe on Thursday confirmed that it would ship a beta version of its online image-editing software, Photoshop Express, later this year and plans to make a full-featured version available on-demand sometime next year. The company is in the process of rolling out many of its most popular software applications (as well some new ones) in a SaaS format, a tacit acknowledgement that Adobe understands where and how people will be buying its popular software in the future.

“It’s enabling people to collaborate on documents that matter,” said Erik Larson, director of marketing and product management for Adobe’s business productivity unit. “Most of the productivity improvements will come from us working together as individuals. We want to provide the tools for documents that let people assemble ideas and information to tell stories.”

Larson said boundaries such as time and physical locations or technology platforms and disparate browsers have impeded productivity for years.

“Each boundary chips away at the efficiency of teams working together,” he said. “E-mail is great for some things, but not so much for documents.”